Today's Wall Street Journal contained two key op-ed pieces for understanding the current economic situation. The first, from Bank of America CEO Ken Lewis, clarifies just what is and is not occuring in the banking industry. The second, by Professor Laura D'Andrea Tyson, a former chairman of the Clinton's Council of Economic Advisers and current member of President Obama's Economic Recovery Advisory Board, defends the stimulus plan and budget proposal.
In response to Ken Lewis' piece, he is perfectly positioned to see the reality emerging in the banking industry. His analysis makes sense and I believe his facts to be accurate. Then again, upon graduation, he's going to be my boss, so I may be slightly biased. Nonetheless, he is correct that banks are in fact lending, that very few banks are actually insolvent, that TARP is working, that those who caused this mess are now unemployed and/or bankrupt, that the US taxpayers are receiving high real interest rates on TARP funds, and that, as Ben Bernanke has said, nationalization of banks is unnecessary to stabilize the banking system.
Regarding Tyson's article, the arguments against the stimulus and the viewpoints of other prominent economists are pretty persuasive. The budget, as she describes, is "faithful to the progressive vision he articulated during his campaign." I do like the idea of investing in health care, education, energy, and the environment, but wonder where we're going to get the money for all this given that we already have the LARGEST BUDGET DEFICIT AS A PERCENTAGE OF GDP SINCE WORLD WAR II. Perhaps I'm not making myself clear, but this hardly seems the time to be adding even more projects and government bureaucracy to the mix. President Obama promised to sharpen his pencil and cut the weak programs from the budget. Like many others, I was hoping he'd follow through on that plan. Perhaps I was praying for a moment like the scene in Dave in which a reluctant citizen goes through the federal budget with his accountant friend and trims off enough money from wasteful projects to salvage a program that actually makes a difference in people's lives. Alas, the pencil sharpener appears to be broken.
Instead, we get "a shift of wealth through higher taxes on the rich to pay for healthcare...and social programs." The last time I checked, that was a hallmark of socialism. Nonetheless, I wasn't a fan of the Bush tax cuts originally and do not mind seeing them expire. Besides, by the time I make that much money, the Republicans will probably be in power again.
After visiting Walker Foods, a California-based food company with international distribution, last Friday, I realized the vital role of small businesses in the economy. The proposition that "97% of small businesses will see their rates unchanged or enjoy additional tax benefits under the Obama plan" doesn't sound bad at all.
As for the claims that the size of government will not explode, I do not expect it to triple in size or anything. However, the government will have to create an infrastructure to run its ambitious proposals and that will add to the already annoying layers of bureaucracy.
Perhaps Dave's accountant best sums up the American budget: "Who does these books? If I ran my office this way, I'd be out of business."
No comments:
Post a Comment